TOP 5

Top 5

August 27, 2007|By William Sluis

1. Confidence may see a pullback

While financial markets gyrate amid concerns over unpaid subprime mortgages, Americans seem to be paying little heed. Back-to-school sales at the nation's retailers appear robust and the only glaring weak point is the auto industry, where volumes are near a 9-year low. For Tuesday's reading of August consumer confidence index, Chicago economist Robert Dederick expects a pullback to around 105, following July's leap to 112.3. "Oil prices are down, but the headlines have been less than friendly," said Dederick, of RGD Economics. "Confidence has been shaken."

2. Home sales settle in

The housing industry gets a fresh test Monday, with last month's s ales of existing homes. Most analysts expect no change from July's annual rate of 5.8 million units.

3. Solid GDP growth

For Thursday's revision of second-quarter gross domestic product, expect solid growth of 4 percent. Economist Gail Fosler of the Conference Board is telling clients, "The global expansion has two to three more years to run." However, she adds, "rising financial market volatility will be a permanent feature from here on out."

4. Fed rate cut iffy

There is almost day-by-day betting among investors that the Federal Reserve will cut its overnight lending rate no later than Sept. 18, when policymakers gather. But economist Eugenio Aleman of Wells Fargo & Co. said such a move is no sure thing. While the Fed was willing to add money to the banking system earlier this month, he said, policymakers "are not yet ready to drop their long-term concern that inflation is the main threat to the U.S. economy."

5. Gas price sticky

As the dog days of summer dwindle to a precious few, gasoline prices remain about 40 cents below the level of a year ago. Analysts say there may be a further drop going into Labor Day weekend. While much of the country saw a decline to about $2.80 a gallon the Chicago-area price remains stuck at $3.